Contracts - Ch.7 Continued (Terms)
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What is a warranty?
They are peripheral. If they are breached, they do not deprive the innocent party of the whole benefit of the contract
What is a condition?
These are terms that are so fundamental that if those terms are breached, they deny the innocent party of the whole benefit of the contract. Innocent parties has some options. They may request damages, and/or repudiate the contract. Lastly, they may insist the contract be fullfilled and request damages.
What is an Innominate term?
Contract is unclear whether a term is a condition or warranty
Can a warranty bring a contract to an end?
Generally no, only breach of conditions can bring a contract to an end
What is the traditional/intention approach to dealing with innominate terms?
Court looks at the construction and circumstances around its execution. Looking at the common business practices, could it be inferred that the parties intended that the contract be repudiated if the term is breached.
What was the Legal principal that came out of Hong Kong Fur v. Kawasaki?
If no clear intention is discernible from the facts, then look at the effect and consequences of the breach to determine if it is serious enough or grave enough to warrant a repudiation.
What was the approach for dealing with innominate terms that came out of Hong Kong Fur called?
The effect approach
What was the case Kroawchuck about?
This case was about the purchase of a horse. When it was bought, the purchasers were told that the horse was sound. After buying the horse they found out that the horse was not sound. Repudiation was sought
Here the court said the when looking at the contstruction of the contract and the surrounding circumstances and the gravity of the particular issue, the horse was a warranty, not a condition.
What was the legal principal that came out of Wickman Machine Tool Ltd. v. L. Schuler.
The court found that if looking at the term in the contract as a condition would lead to absurd results, then the courts will treat the term as a warranty, even if the contract labels it as a condition in writing. A condition is an indication of the intention of the parties, but is no way conclusive, or absolute.The courts must ask what is the intention of the parties when viewing the contract as a whole, just not is the particular term in isolation.
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